In 2020 the global market for white-label banking solutions was valued at over $1.6 billion and is expected to grow to over $5.1 billion by 2030. These statistics inform on the massively increasing interest in white-label mobile banking solutions from Fintech companies and traditional banks.
“We don’t intend to reinvent the wheel, we aim to make it perfect” - Say’s Paypal’s CEO, Dan Schulman.
White-label mobile banking solutions offer financial institutions a greater potential for revenue growth while providing services that are differentiated through innovation. Growth potential and differentiation have been the top drivers for banks’ and Fintech providers’ worldwide adoption of white-label banking services.
Today, both traditional banks and Fintech companies focus on providing highly differentiated but customer-centric services; which need constant innovation to stay ahead of the curve.
As a result, white-label solutions for banking services have gained momentum in the financial industry. The solutions offer a less costly but smart way for banks and Fintech providers to provide innovative products and services.
What is White Label Mobile Banking?
A white-label Fintech is a financial institution that builds infrastructure that enables other financial institutions like traditional banks, to offer their services in the digital space. As such, a white-label bank is a technology provider for other financial institutions and other companies outside the financial industry, that need payment platforms.
These companies, Fintech, and banks offer branded services through white-label solutions, eliminating the need for building their banking infrastructure.
Consequently, white-label mobile banking is the process of providing third-party access to infrastructures that enable banks and fintech companies to build their mobile banking application. The financial institutions can swiftly customize the provided application to offer branded banking services to customers.
The white-label mobile banking solutions enable 24-hour access to financial services and products through mobile devices such as tablets and smartphones. Users can perform a variety of functions from checking account balances, viewing translation history, cross border transactions to accessing loans.
Picture a white-label mobile application as an already-built shell for mobile banking. A wide range of companies, including non-financial companies, use these banking shells due to their advantages.
“Even though banks have become a convenient one-stop place, many are yet to evolve in terms of how their financial products are offered; they fail to match the high-paced dynamic financial market” - Says McKinsey, a financial expert.
Neobanks (often referred to as challenger banks, digital banks that operate entirely online through Internet platforms and mobile apps) have leveraged white-label banking solutions for easier entry into financial markets.
The solutions are built with frictionless UI/UX, enabling financial institutions to offer mobile banking features for the modern banking experience anticipated by financial service consumers.
Benefits of White Label Banking
White-label banking solutions solve issues such as the speed of launching new products, the cost of building new mobile applications and scaling.
“We saw that the biggest challenge banks and Fintech companies experience is getting new products to market fast and the complexity of developing multi-vendor banking solutions; technical robustness and access to expertise on financial products and services” — says Andrew Laycock, Shaype
Building digital banking solutions from the ground up requires investing significant funds upfront. Infrastructure building, regular maintenance, and regulatory compliance translate to significant costs.
White-label mobile banking solutions alleviate these concerns; time to market, cost, and compliance, by offering secure and regulatory-compliant pre-built solutions. This results in:
Reduced Time and Cost of Development: Fintechs and banks get to skip the infrastructure development process, which can be lengthy. Additionally, the high cost of development can be avoided. White-label banking platforms make it less costly to launch digital financial products and services while eliminating the time required for development.
Time to Market: white label mobile banking solutions allows financial institutions to launch services efficiently and fast. As a result, the banks and Fintech become the first to introduce innovative products in their segments. White-label solutions save on time, allowing these companies to focus more time on innovation and leveraging market opportunities.
Seamless integration: white label mobile banking platforms enable seamless integration of new services into existing systems through modern APIs. This seamless integration offers smooth UX, ensuring users' expectations are met while eliminating data gaps within the financial institution’s orrganization.
Scalability: As the company grows and expands, the financial services offered should expand too. White-label banking platforms provide for scalability, enabling companies to accommodate the expansion of services with future growth.
Brand Differentiation: Improve brand differentiation through consistency and customization, made possible by white-label banking platforms. The platform can be customized to feel and look like the brand intended for the market; and brand identity. This results in a cohesive UX across all transactions and interactions.
Increased Customer Reach and Engagement: White-label banking platforms offer a competitive edge by enabling financial institutions to offer innovative features and financial tools. White-label banking solutions providers innovate constantly, allowing banks access to the latest fintech services.
Challenges and Considerations
Although white-label mobile banking offers financial institutions several benefits, there are some challenges and concerns that must be considered. These challenges arise from the highly distributed nature of white-label banking solutions because the platform features and functionalities are delivered by a third-party provider.
Here are the main concerns areas that companies need to consider:
Security with API integration: BaaS integrations must have multi-factor authentication, compatibility management, and continuous API monitoring to ensure the solution runs smoothly and there is data security despite constant updates by the providers.
Regulatory Compliance Concerns: Data regulations such as GDPR limits the movement of data. Therefore, banks using BaaS must confirm data ownership and location to ensure compliance with AML and KYC policies and for internal security assurance to customers.
Moreover, the white-label banking providers operate in a highly regulated environment, with both consumer protection and financial regulations. Compliance with these laws and regulations requires constant monitoring of the offered innovative services and adaptation. Non-compliance can result in reputational damage and legal consequences. Nice example of white-label mobile banking app you can find here: https://itexus.com/portfolio/white-label-mobile-banking-app/
Limited visibility and control: Since the underlying platforms are developed and provided by third-party companies, the financial institutions have no visibility into the internal operations of the providers. Therefore, control is limited. However, banks can develop guidelines that third-party developers can follow. Also, strategies can de created and implemented to ensure the financial institution has control over its users’ experience with the white-label mobile banking application.
Case Studies/ Success Stories
N26 with white-label mobile banking
Established neobanks such as N26, have been leveraging white label mobile banking solutions for years to offer innovative products and services. One of the white-label banks that N26 partnered with is Axos. N26 focuses on partnerships that improve the bank’s capacity to offer benefits to their customers that would not be possible otherwise and to stay relevant in the financial services market.
Through white-label banking solutions, N26 harnesses the benefits AI offers in categorizing consumers’ spending habits; presenting the data in diagrams. On user experience, the bank’s white-label banking platform enables it to offer personalized experiences to customers. For instance, users can create and attach personal hashtags to a transaction, ensuring better organization.
N26 has scaled faster than competitors by using pre-built banking and payment platforms provided by third-party partners. N26 can drive new customer acquisitions at a low cost or zero cost, due to the white-label banking solutions. It generates more revenue through subscription fees, interchange fees, and revenue shares through partnerships.
The bank offers a freemium model, that is a free basic bank account, which promotes the acquisition of new users. Then, N26 offers a two-level subscription model, N26 Meta and N26 Black. Additional value through different features allows the bank to make money through interchange fees. These features include transactions, overdrafts, above limits, FX, and withdrawals.
On the payment platform, N26 gets additional revenue from businesses that use the solution to receive payments from customers. The interchange fees gained by N26 is driven by these businesses’ consumers but are paid for by the business owners. This German neobank raised over $692 million in revenue in 2019 due to this innovative white-label mobile banking solution.
Looking into the future, N26 intends to leverage Artificial intelligence (AI) to provide personalized solutions to its customers at a massive scale by anticipating users’ needs. In turn, they would gain increased customer engagement. The company plans on more white-label mobile banking solutions that will allow it to move from a product business model to a solution-based one.
Chime with white-label mobile banking
Chime, a US-based digital bank that operates solely online, is one of the best examples of Fintech providers using white-label mobile banking to get to market fast. In its early days of launch, Chime partnered with Bancorp, a white-label banking solutions provider.
Following the extended partnership in 2020, in 2021 Chime raised $750 million in a funding series, raising its value to $25 billion.
Chime currently partners with Stride, a third-party provider. Stride offers a solution for Chime’s deposit accounts, and savings accounts and issues Chime’s secured debit and credit cards. As a result of these partnerships, Chime offers its customers a better user experience, and innovative and fully regulated financial products and services.
Chime is a Fintech company founded on the principle that everyone should have easy access to helpful and easy financial services. The existing financial market does not help millions of US citizens; there is a huge gap of unmet needs.
As a response, Chime created a business model, which offers profits to consumers. The partnership with white-label mobile banking providers allows Chime to invest more time in designing innovative and customer-centric financial services. The products and services are aimed at providing competitive services at lower costs to all Americans who are underserved by traditional banks.
ABN Amro and Tink
ABN Amro has also partnered with several white-label mobile banking companies over the years. One such partnership was with Tink for an open banking platform. Tink, a cloud-based company, offers underlying infrastructure and data-driven products that are making way for the future of financial services.
The partnership allowed ABN Amro to offer access to five different banks to non-ABN Amro customers. The customers were able to simultaneously manage these five accounts, making the white-label platform beneficial.
Tink, worked together with ABN Amro to introduce the multi-banking feature into the bank’s standalone application, Grip, in 2019. This made ABN Amro’s mobile banking app the first banking app in the Netherlands to offer an open banking platform.
Through Grip, the users can access their account information for all five banks. Furthermore, the app offers insight to its users; delivering more value. By making Grip more comprehensive and relevant, the white-label banking solution offers ABN Amro access to a wider market. ABN Amro can serve and offer more services to customers that are yet to be ABN Amro members.
After launch, the app’s users grew to 700,000 users with positive ratings from these users.The app has been offering its users a new landscape with a complete and improved user experience.
Future Trends
The ever-increasing focus on customer centrism and customer retention in mobile banking is driving the white-label mobile banking market toward significant growth in the future.
This trend is further supported by the rising adoption of open banking; the open banking market is expected to increase to about $75 billion between 2024 and 2028. While white-label banking solutions unlock new possibilities in the financial industry, non-financial institutions are also benefiting through white-label payment gateways.
White-label payment gateways for non-financial businesses emerged to solve the need for online payment solutions. Through white-label solutions, businesses can brand their payment process to include their design and logo.
With the increasing use of emerging technologies such as AI for personalized user experience and demand for online transactions, white-label banking solutions are set to play a central role in the future of banking.
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